Thank you so much for inviting me. I see a number of familiar faces and many new faces. I just wanted to start by welcoming you here to the University of Hawai‘i on behalf of the people of Hawai‘i. It really is an important conversation that you’ve chosen to participate in. And I certainly look forward to a few days of intense, intellectual challenge as well as lively conversations that we hope can move the State of Hawai‘i forward. I think and I know that you will learn from many of the experiences that those of us who are residents here would want to share with you.

A couple of things: I’m an electrical engineer by profession and spent almost 20 years at the telephone company, so I’m somewhat familiar with a utility and the way that they’re regulated. I also have an MBA from the University of Hawai‘i, so I understand a little bit about economics. I was a Double E student here on this campus. In fact, I spent most of my time across the roadway there during the oil crisis, so I’m very much aware of the challenges. I don’t know how many of you actually lived through the gas rationing and had to time refills of your car. Depending on your license plate, you could fill up on an even day or an odd day. At that point in time in the 1970s, there was lots of talk about the dire consequences of the United States of America being dependent on imported fossil fuel, and that’s 40 or so years ago when that conversation was really top of mind.

As a student here at the University, there definitely was a lot of conversation about the need to focus on renewable energy, alternative energy. Our partners here with the Hawai‘i Natural Energy Institute will remember that the Institute was formed in 1974, during that period when we had the energy crisis. And in 1979, Jimmy Carter installed solar panels on the White House. I don’t know if they’re still working and I don’t know what the efficiency of those systems are, but certainly he did it as a symbol of what we should be thinking about, maybe 40 years or so ago.

We have come a long way. I think it has been said the price of renewable systems, the sourcing of energy has come down tremendously, especially in the last decade. Hawai‘i has a unique situation. Like most island nations, I think we are most vulnerable to sea level rise and climate change. Clearly we are reminded about the change in sea level. And I think most importantly, about how vulnerable most island nations are in the way they were developed. All of the important energy institutions or facilities are typically on the shoreline. All of our highways, all of the most important highways are along the shoreline. There is nothing that is important in the Hawai‘i economy that really isn’t tied to access to the shoreline or vulnerability to sea level rise and climate change. So although our economy has evolved to one that is dependent on the ocean and the sun and the sea, we definitely realize that we are vulnerable.

The state’s isolation, from the energy or electricity perspective, is just as daunting. We don’t have the luxury of being connected into a national grid. We are isolated. In fact, each of our islands is isolated in a grid and everything that we do, we have to be self-reliant.

The flip of that, and I like to look at every challenge as an opportunity, certainly does create the environment for Hawai‘i to lead the world. As has been stated, a couple of years ago we passed the Hawai‘i Clean Energy Initiative. And a few years ago, updated that to really be committed to 100% renewable for electricity generation. And I’ll use the air quotes. As has been said, it depends on how you define that or what you want to make of it. But I’m certain by 2045, we won’t need the air quotes because there’ll be lots of opportunities and different ways to do that.

Our grid is unique because of its isolation. Our energy costs are high because we were so dependent on imported fossil fuel. We have abundant renewable sources and as I’ve said, we’ve been studying them since 1974. Obviously, the technology wasn’t as efficient or available. The challenge has always been, even when I graduated with my Double E and actually started doing some renewable energy studies back in the late 70s and early 80s, the challenge in Hawai‘i is really about storage and being able to regenerate and deliver the energy when it’s needed, not when it’s convenient for it to be generated. But it certainly is an opportunity, and I thank all of you for becoming and choosing to be part of this conversation.

There are a couple of other things I think that makes the Hawai‘i challenge a real opportunity for many of you. The Department of Defense has really committed to a more sustainable energy future as well, and they have a big presence in our islands. They are making investments to move toward a sustainable energy future as well. The State has executed a Memorandum of Understanding with the Department of the Navy to work jointly on renewable energy projects in a number of different ways. I like to look at those partnerships as really another affirmation of how we can bring different resources together and funding sources that might not be available to most, to really move the ball forward in terms of renewable energy.

We, from the State’s level, embrace this challenge for a number of reasons. One, clearly our people want it. I served in the Legislature before becoming Governor. There is tremendous support and acknowledgement in our community that dependence on imported fuel and fossil fuel is not a good thing for the planet. People of these islands truly believe that a renewable energy future is better. So for us policymakers, it makes it a little bit easier for us because we do know that the majority of our community believes that this future is better for all of us.

We look at it from the State’s perspective in a different way. We do import fossil fuel to the tune of $5 or $6 billion depending on what the current price of oil might be. And really, that is our residents’ capital leaving the State purely for the purpose of bringing fuel in. From an economic perspective, if we could direct those funds into an investment of jobs for our people, we would definitely be better off. We do know that technology is helping us tremendously. In the last five years, specifically the last ten if you go a little bit further back, there’s been a tremendous decrease in the cost of intermittent renewable energy sources. And I think that is making a lot of different opportunities cost effective and more economic, moving forward.

There are lots of challenges that I think are still before us, but I am proud of the progress that we’ve made in the State. At the end of 2016, we’re at 26 percent renewable and that’s from below ten percent even just five or six years ago, maybe ten years ago. We’ve made tremendous progress. Our friends on Kaua‘i truly led the way. It’s a very interesting challenge and opportunity. There are many days that we’re at 99 percent renewable, especially during the middle of the day when the sun is shining and everything is going well.

I was fortunate to be able to participate in the groundbreaking on Kaua‘i of the first closed cycle biomass generating plant, and it’s been operating successfully on the island of Kaua‘i. And a few weeks ago, I was able to participate in the blessing of the first dispatchable solar project on Kaua‘i as well. And so a combination of the panels and the battery costs being reduced to the point that dispatchable solar is cost effective with fossil fuel.

So I think that there’s lots of opportunities, lots of challenges. I do know that it does require a different model than the traditional utility model. For almost 20 years I worked in a company that had to deal with the traditional utility model. The thing that I learned in working for a utility is that regulated utilities have a perverse sense of subsidies built into regulated rates. And if we truly want to look at what the utility of the future will be, we have to get rid of the subsidies. We have to create an economic model where people are charged what it actually might cost to be able to deliver the service. The subsidies that are built into a regulated utility really cannot survive right, I think, especially when you look at what happens in Hawai‘i. Our isolated grids, when we talk about renewable energy, we have to generate it and we have to consume it.

I just came back from a meeting of Governors up in Seattle and the Montana Governor likes to brag about how they’re the leading renewable energy producer in the United States. And well that’s just because they can put up whatever windmills they want to and ship the energy to whoever is willing to pay for it. And they don’t really have to pay a whole lot of attention to what the demand might be in their State or who might need it when they’re generating it because they just put up the windmills, turn on them on, and then sell the power to wherever it happens to be needed.

We don’t have that luxury here in Hawaii. We will have to generate enough energy so that when our people need it, we can be able to deliver it and then we have to ensure that we can deliver the energy when it’s needed. And I think that’s the challenge that all of us would seek your help in trying to sort through. What things need to change? How does it need to change? What is the role of the regulators? What’s the role of the utility? How does the utility continue to function when the rest of the industry is, for the most part, living in the past? And we are, and our community, is asking for our utility to live in the future. And there’s really no clear transition path from how to get from the utility of the past to the utility of the future.

So I just wanted to thank you all of you for being there. I do appreciate your participation in today’s conference. I’m excited about a lot of the different things that we’re doing here. I’m excited about the things that our utilities are doing here. I am confident that we will make our goal of 100 percent renewable. I think we’ll be assisted a lot by the technology, and the price of the technology that’s driving a lot of the performance and the price reductions. And I really have faith in our people that both work for the regulators, the State, and the utility to really find a better way forward.

We do know that the challenges are real. We need to find a way to transition from the past to the future. And the exciting and challenging thing is that it’s happening even faster than I ever thought it would. And so I think that’s the opportunity and the challenge. Thank you very much for being here. I wanted to thank you for allowing me to be part of this conference. I look forward to the next couple days of the conversations that you’ll have. For those of you not from Hawai‘i, I hope you will listen to some of the stories that we would like to share, and I think most importantly, think about how to help us embrace the challenge and the opportunity to link the past with the future. Thank you very much.
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